Here, we review Qualifying Recognised Overseas Pension Schemes, a flexible type of retirement savings plan that offers advantages to British expats. If you are a pension investor based in mainland Europe, especially Switzerland, Denmark, Sweden, the Netherlands, and France, read on to discover the benefits that an overseas pension could provide.
Although this type of pension product does not operate within the UK, it is nonetheless subject to a strict process of approval by HM Revenue & Customs (HMRC) – hence the reassuring use of the word recognised. Because these plans fall outside UK legislation and tax regulations, it is possible to base an individual's fund in a country that is different from that person's current country of fiscal (i.e. tax) residence. Additionally, the future monthly or annual income may be paid without deduction of UK income tax at source. As a result, overseas pension products offer a broad range of possible advantages to those expatriates who qualify.
QROPS: Benefits and Risks
Private pensions are payable on reaching fifty-five years of age – and in some cases as young as fifty. Significantly, the fund is not subject to IHT (inheritance tax) or lump-sum death benefit taxes, a valuable point for wealthy expats if the HMRC deems an individual to be UK domiciled.
Increased opportunities through diverse investment choices are an extra feature of this type of plan, though the need for reliable financial advice and proper planning is also evident. Naturally, tax liabilities might subsequently arise in the country of residence. Plan charges are generally on a fixed fee basis and relatively transparent.
Here at Belgravia Wealth Management, we work internationally and independently, offering unbiased and expert financial advice to UK-based and expatriate savers and investors. If you are interested in pension products to safeguard and improve your retirement income, we will be delighted to help.
Who Can benefit from a QROPS?
British nationals who now live abroad can set up their plan by receiving an inward transfer (also known as a pension transfer) from a UK pension or combination of plans, whether they be large or small. This opportunity may be particularly useful when one has acquired multiple small funds in different periods of employment.
Over recent years, a significant number of UK pension fund savers who live abroad have decided to organise their private retirement funds in this way, to take advantage of the flexibility and investment potential on offer. Apart from consolidating multiple smaller pensions to simplify one's finances, which helps to reduce charges and maximise growth, there are other advantages. In the event of an inheritance, the nominated beneficiaries can receive the proceeds without undue delay. There may also be benefits regarding payment in a local currency such as Euros, depending on the plan and provider.
Additionally, there is no cap on the lifetime allowance. Income drawdown is flexible, especially when the pension holder has been outside the UK for five years or more.
Receiving honest advice, valuing your current funds, organising your pension transfer and choosing the right investments are the first steps towards securing long-term peace of mind. By starting your review now and checking the pension products that are available, you will be able to plan for your retirement and ensure the best prospects for the future.
If you have accrued pension rights and would like to make financial arrangements for your future retirement, various options are available to you. We invite you to contact our expert advisers today for advice, based on substantial financial expertise and the highest standards of service.